SGD New Issues Review : Cambridge MTN 5Y 4%

Cambridge MTN to Sell SGD 5Y BBB- Bonds, IPT 4% Area

  • Issuer: Cambridge-MTN
  • Guarantor: RBC Investor Services Trust Singapore Ltd. (in its capacity as trustee of Cambridge Industrial Trust)
  • Issue rating: –/BBB-/–
  • BK: CIMB

From the S&P ratings report
“Cambridge Industrial Trust (CIT: BBB-/Stable/–; axA-/–) will
use the proceeds from the proposed issuance, which we expect to take place
this month, to partially pay down its secured S$250 million club loan.”

Loans are more expensive. I am unsure of my information but it seems that they paid over 4% for a 3 year loan that is coming due back in 2013 when interest rates were much, much lower.

Cambridge bond spreads have tightened quite a bit given that they used to typically pay 2% above prevailing interest rates for their bonds. This new one would be the tightest they have attempted at 1.85% premium (4% – 2.15%*the 5Y int rate).

Market Cap $921.5 mio

Recent Headlines

25 April
Cambridge Ind’l Proposal to Issue New Shares Voted Down at AGM

By Jonathan Burgos
(Bloomberg) — Shareholders with a combined 63% interest voted against the management proposal for a mandate to issue new shrs equivalent to up to 10% of Cambridge Industrial’s outstanding shrs, co. says in regulatory filing.

  • Allowing the company to issue new shares without having to seek approval from shareholders would have given the company flexibility to raise funds for potential acquisitions: co. says in letter sent to shareholders before yesterday’s AGM
22 April
Cambridge Industrial Trust 1Q DPU Down as Property Expenses Rise

By Chua Baizhen
(Bloomberg) — DPU drops 2.1% to S1.225c; net property income rises 12% to S$21.2m.

  • Growth in NPI continues to be impacted by higher property expenses resulting from conversions of properties from single-tenanted to multi-tenanted

Then again, they have the a famous Singapore activist shareholder cum hedge fund (Splendid Asia Macro Fund)  holding a substantial chunk of shares so I am not sure if being a bond holder at 4% is better or being a shareholder at 6.81% dividends is better ?

From my previous issue review ( ) and my comment on the lack of strategic focus, I noticed the company is turning its strategy around with acquisitions and disposals.

Perhaps that is why the share price is up nearly 6% this year.

I am neutral at such yield levels especially after Sembcorp’s 4.75% for a 5 year callable perp yesterday.